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PPG Industries to Jettison European Fiber Glass Business

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PPG Industries (PPG - Free Report) has cut an agreement to divest its European fiber glass operations to Japanese glass maker, Nippon Electric Glass Co. Ltd. (“NEG”). The terms of the deal were not divulged.

The European fiber glass operations, which had sales of around $150 million last year, makes reinforcement materials for thermoset and thermoplastic composite applications and caters to transportation, energy, infrastructure and consumer markets. PPG employs around 550 people in this business that includes manufacturing plants in Hoogezand, Netherlands, and Wigan, England as well as a R&D facility in Hoogezand.

The transaction, which is subject to regulatory approvals, completion of employee consultation processes and other customary closing conditions, is expected to close in the second half of 2016. Upon the transaction closure, PPG Industries will continue to support the manufacturing operations with services including bushing fabrication and engineering support. The coatings giant plans to use the proceeds from the transaction for general corporate purposes.

PPG Industries’ shares closed around 0.2% higher at $108.42 yesterday.

PPG Industries saw higher profits in the first quarter of 2016, aided by its cost-management initiatives and contributions of acquisitions. Adjusted earnings for the quarter beat the Zacks Consensus Estimate while revenues fell short of expectations.

The first quarter saw increased growth in Europe, and the company expects the trend to continue. It anticipates regional demand in the U.S. and Canada to improve incrementally year over year. Emphasis on reducing costs also remains for the coming quarters.

PPG Industries remains committed to deliver higher organic growth, including continued commercialization of its innovative, industry-leading coatings technologies.

The company is well placed to gain from continued strength across North American automotive and aerospace markets, synergies from acquisitions and cost-saving measures. Healthy momentum across automotive OEM, automotive refinish and aerospace markets are expected to support its results moving ahead.

PPG Industries is a Zacks Rank #2 (Buy).

Other well-placed companies in the diversified chemical space include Albemarle Corporation (ALB - Free Report) , Innospec Inc. (IOSP - Free Report) and Asahi Kasei Corporation (AHKSY - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).

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